Restoration Hardware

01/19/2015 7:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

On its surface, our favorite growth stock investment for the coming year is a high-end home furnishings maker, explains Michael Cintolo, editor of Cabot Top Ten Trader.

But when you dig into the story, Restoration Hardware (RH) is much more than that—it’s in the midst of a major transformation that, so far, has proven to dramatically boost sales, earnings, and Restoration Hardware’s image.

The company has a few dozen regular stores today, like those you see in the mall, but these stores are only able to display a fraction of their high-quality merchandise.

The solution? Huge, 50,000 square foot showrooms, which are just starting to open across the country. (A huge, once-a-year catalogue also works as their primary marketing vehicle.)

Thus, the firm is breaking down the barrier between the consumer and designer, offering specialty products and even design consultation that can’t be found elsewhere.

The firm has only opened up a couple of its giant showrooms (another dozen or two are coming down the pike), but results have been outstanding.

Long-term, management believes it can get revenue up to $4 billion as these showrooms build the brand and make it easier for consumers to purchase Restoration’s products. I think 2015 will be when institutional investors pile in.

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